2019 NEW TRENDS FOR MOBILE PAYMENT IN CHINESE

1. TOP 10 OVERSEAS DESTINATIONS IN 2019In 2019, destinations within a four-hour flight are still the most popular choices for Chinese tourists.They are continuously enthusiastic on visiting Japan, South Korea, Thailand and Singapore. In addition,the U.S., Australia, the U.K. and Canada are also among the top 10 countries, which indicates thatChinese tourists are fairly keen on traveling to English-speaking countries.Beautiful natural scenic spots, unique cultural and historical landscapes, theme parks and leisure attractionsin countries such as Japan, South Korea, Thailand and Singapore, greatly appeal to Chinese tourists.Chinese tourists traveling to these countries are characterized by high frequency and preferencefor in-depth exploration. Cities such as Tokyo, Osaka and Kyoto in Japan, and Seoul, Jeju Island andBusan in South Korea are popular tourist destinations for Chinese tourists. Meanwhile, in Japan,man-made landscapes and ecological landscapes, such as Tokyo Disneyland, Tokyo Tower, Ginza,Nara Park, and Mount Fuji, meet the diverse needs of tourists. Nearly half (46%) of tourists whovisited Japan in 2019 expressed that they intended to make another in 2020, and about 30% of thosewho visited South Korea and Singapore hold the same opinion (29% and 31% respectively).Turkey rose to the top 20 destinations for Chinese tourists for the first time in 2019. Overseas traveldestinations once thought to be favored only by tourists born in the 1990s have gradually gainedpopularity among other age groups because of promotion by various platforms.TOP 10 OVERSEAS DESTINATIONS IN 201920%Japan14%11%South Korea The ceThe U.K.CanadaNew ZealandSource: Nielsen07

2. TOP 10 COUNTRIES WHERE CHINESE TOURISTS LOVETO USE MOBILE PAYMENTThe popular preference of Chinese tourists for overseas destinations has influenced the growing paceof Chinese mobile payment overseas. It is seen from the statistics that the ranking of popular overseasdestinations among Chinese tourists highly overlaps with that of countries that support Chinesemobile payment.Among the countries that provide mobile payment access to Chinese tourists, Singapore, South Koreaand Japan enjoyed a higher frequency of usage.Back to 2015, Singapore, South Korea and Japan were among the first batch of countries to adoptChinese mobile payment solutions to provide convenience to Chinese tourists. Furthermore, e-paymentswere listed as one of the strategic national projects in Singapore government's 10-year plan for a SmartNation by 2025. In 2018, Japan approved a plan for a Cashless Vision. Evidently, the cashless landscapein East and South Asian countries has begun to take shape. Under mobile payment user-friendlyenvironment, Chinese tourists are more accustomed to using mobile payment in Singapore, South Koreaand Japan.Australia is not only one of the major settlements for overseas Chinese, but also a primary outbounddestination for Chinese tourists. Mobile payment also has a high penetration rate in Sydney andMelbourne, two major tourist cities in Australia.TOP 10 COUNTRIES WHERE CHINESE TOURISTS LOVE TO USE MOBILE PAYMENTS1SingaporeSouth KoreaJapanAustraliaThailandFranceNew ZealandCanadaThe U.K.The 1.0%Source: NielsenIn the past few years, Chinese tourists traveled to distant destinations more frequently, such asAustralia. As a result, local merchants have gradually gained a rich experience in Chinese mobilepayment solutions and formed a more vibrant environment for mobile payment, which facilitatesChinese tourists.Note1: Ranking determined by the proportion of Chinese tourists that used mobile payment in a specific country in 201908

3. TOP 10 FUTURE DESTINATIONS FOR 2020By comparing the top 10 popular outbound destinations in 2019 and the planned outbound traveldestinations in the coming year, we find that Chinese tourists are keen to travel to Japan, South Korea,Singapore, and Thailand that are within a four-hour travel, which is highly consistent with countriesenjoying high usage of mobile payment.Chinese tourists are, however, not satisfied with closer destinations. They consider traveling to moredistant destinations within an eight-hour flight. Among these countries, the preference of Australia andNew Zealand increases significantly.With higher demands from Chinese tourists for high-quality and experience-oriented overseas travel,Australia and New Zealand attract more Chinese tourists through their picturesque natural scenery andunique experience featured by opposite seasons between the southern and northern hemisphere. Also, thepopularity of self-drive tours and the desire to get away from the hustle and bustle held appeal for Chinesetourists, rankings of "The Most Scenic Roads" attracted self-drive and photography enthusiasts alike.More European countries, such as the U.K., Germany, Switzerland and Spain, are now populardestinations considered by Chinese tourists for their future travels. Brazil and Mexico in South Americaalso attract more Chinese tourists to visit. This shows that once unexplored destinations by Chinesetourists have the potential to gradually become mainstream options with their unique cultures.TOP 10 COUNTRIES FOR OVERSEAS TRAVEL PLANS IN 202019%11%10%9%JapanSouth KoreaThe U.S.Australia8%8%Singapore New Zealand7%7%6%6%FranceThailandMaldivesItalySource: Nielsen09

Interestingly, the willingness to travel to countries with the highest mobile payment usage, suchas Australia and New Zealand in future travels continues increasing. As mobile payment becomesincreasingly popular among Chinese tourists during overseas travel, support for mobile payment hasbecome one of the factors for Chinese tourists when choosing travel destinations.FACTORS CHINESE TOURISTS CONSIDER WHEN CHOOSING AN OUTBOUND TRAVELDESTINATION (TOP6)scenic and unique tourist attractionsSafety31%29%29%28%AffordabilityEase of visa proceduresFit with my scheduleFriendliness to tourists37%43%Source: NielsenFACTORS AFFECTING TOURISTS' OVERSEAS SHOPPING HABITS (TOP 3)37%Payment method36%36%Product qualityPrice2019Source: Nielsen10

TRENDS IN CHINESETRAVEL AND CONSUMPTIONOVERSEAS11

1. LOWER-TIER CITIES PROVIDE MORE DRIVING FORCEIN CHINESE OUTBOUND TOURISM MARKETIn 2019, Chinese outbound travels have seen significant growth in lower-tier cities. One reflected in overseastravels becoming increasingly common among tourists from non-tier 1 cities, the other reflected the growthin in-depth tourism.TIER 2 AND TIER 3 CITIES ARE CATCHING UP WITH TIER 1 CITIESOn per capita outbound destinations, the difference between residents in third-tier and first-tier citiesnarrowed from 0.7 in 2018 to 0.5 in 2019, while there was virtually no difference between those in Tier2 and Tier 1 cities. In terms of per capita annual overseas travel expenditure, the difference betweenresidents in Tier 3 and Tier 1 cities significantly dropped from USD 1,724 in 2018 to USD 606 in 2019. Ontravel budget for the coming year, the gap between residents in Tier 3 and Tier 1 cities shrank sharplyfrom USD 1,859 in 2018 to USD 614 in 2019 while the gap between residents in Tier 2 cities and Tier 1cities shrank from USD 716 to USD 537. These narrowing gaps are mainly due to the general increase inpurchasing power and the opening of new routes.THE GAP BETWEEN CHINESE TOURISTS FROM TIER 3 CITIES VS TIER 1USD 1,72420182019USD 6,06Per capita annual overseas travel expenditure0.72018USD 1,724201920180.52019Per capita outbound destinationsUSD 6,06Source: NielsenAverage annual spending of Chinese tourists on outbound travel per personIn addition, Chinese tourists from Tier 2 and Tier 3 usually0.7plan more definitely on future overseas trips.About 58% of Tier 3 Chinese tourists expressed they had made definite travel plans and decisions for201849%54%38%58%2018201920182019their outbound destinations in the coming year, which increases 20% compared with 2018.2019THE PROPORTION OF DEFINITE PLANS0.5FOR OUTBOUND TRAVEL IN THE FUTURETouristsfromTouristsfromofTier2 cities (or regions) traveledTotalnumberscountrieswithinthe ourists from Tier 2 citiesTourists from Tier 3 citiesSource: Nielsen12

CHINESE TOURISTS FROM TIER 2 AND 3 CITIES OPT FOR MORE DIVERSE AND IN-DEPTH TRAVELMore Tier 3 Chinese tourists traveled abroad in 2019, among whom, 46% visited countries in East Asia orSoutheast Asia. Taking nearby countries like Japan and South Korea as examples, the visits by Tier 3 Chinesetourists reached 16% and 13% respectively, which was a significant growth from 11% and 10% in 2018.In 2019, Tier 2 and Tier 3 Chinese tourists gravitated toward more in-depth experience during their overseastravel. Compared with 2018, more Tier 2 Chinese tourists chose to travel to India (3%), West Asian and NorthAfrican countries, such as Turkey, Israel, Egypt and Morocco, which were once less popular destinations amongChinese tourists. At the same time, more Tier 3 Chinese tourists chose to travel to West Asian and NorthAfrican countries, such as Egypt (4%), Turkey (3%) and Israel (2%).In addition to the willingness of Chinese tourists, their outbound travel behaviors were also influenced bylocal stimulus in Chinese tourism market. Israel, for example, has sought to explore the Chinese tourismmarket in the past few years. It launched direct flights with China, established new visa centers, and issued10-year multiple-entry visas to Chinese tourists. According to Israel's Ministry of Tourism, about 105,000Chinese tourists visited the country in 2018 (compared to 47,000 tourists in 2015).DESTINATIONS VISITED BY OUTBOUND CHINESE TOURISTS IN 2019Destinations with the largest increase in number of Chinese tourists from Tier 2 citiesJapanSouth KoreaTurkeyIsraelEgyptDestinations with the largest increase in number of Chinese tourists from Tier 3 citiesIndiaTurkeyIsraelEgyptSource: Nielsen13

2. NICHE DESTINATIONS GRADUALLY GAINEDPOPULARITY AMONG ALL AGE GROUPSNiche destinations in faraway West Asian, Northern European and South American countries where unfamiliarlanguages are spoken were once only favored by Chinese tourists born in the 1990s. However, in 2019, thepopularity of these countries surged significantly among post-80s/70s Chinese tourists.In 2019, for those who were born in the 1980s, around 10% of them traveled to Central Asia, West Asia andAfrica, a sharp surge compared with 2018 (4%). Turkey, Saudi Arabia, Israel, Egypt, Morocco and South Africawere all included in the popular overseas travel destinations among them. More of them chose to travel to SouthAmerican countries such as Brazil (3%) and Mexico (2%) as well.The proportion of the 1970s having chosen to travel to Europe and America regions raised. In 2019, nearly 7% ofthem went to the U.K., witnessed a significant increase over 2018. In addition, about 21% traveled to the Americaregion, and more tourists have even been to Brazil in South America. People born in the 1970s also expect to havea more independent and in-depth local experiences through self-guided tours. In 2019, the proportion of themwho took package tours fell, while the proportion of those who went on semi-self-help tour rose slightly.DESTINATIONS VISITED BY OUTBOUND CHINESE TOURISTS IN RN ASIAAFRICACentral and Western Asia / AfricaSaudi Arabia1%Turkey1%Israel1%Egypt1%Morocco1%South uropeThe U.K.PolandSouth 3%2%5%1%BrazilMexico20181%2%2%2%2019Source: Nielsen14

3. YOUNG TOURISTS SPENT MORE ON A SINGLE TRIPIn 2019, compared with 2018, Chinese tourists who were born in the 1990s spent nearly 12% more on a singleoverseas trip and the proportion for the post-80s generation was 15%. An underlying reason for the increasedtravel expenditure may have been their in-depth local experiences and exploration of local cultures.THE AVERAGE ANNUAL SPENDING OF CHINESE TOURISTS 3,414 3,834 4201990S 3,405 3,929 5241980S20182019Source: NielsenThe consumption upgrading of young outbound tourists was reflected in various aspects, such as tripplanning, local accommodation, entertainment and leisure. Around 70% of millennials would proactivelysearch for information of local distinctiveness and discounts on the internet even after they reachedtheir travel destinations. More than 50% of those who were born in the 1990s chose to stay at localhomestays and B&Bs rather than hotels. In addition, nearly 34% of tourists born in the 1990s attended concertsor stage performances at their travel destinations, while 26% experienced local outdoor sporting activities.Outdoor and sporting activities grew in popularity: tourists born in the 1990s are fond of sportsTHE PROPORTION OF SPENDING ON SPORTS VS ALL ENTERTAINMENT COSTS26%25%23%1990S1980S1970SSource: Nielsen15

Some were unwilling to plan their trips in advance. Instead, they enjoyed exploration and being surprised70%I searched for information and determined myitinerary after arriving at my destination1990S / 1980SSource: NielsenTourists born in the 1990s liked to experience folk-customs, and they preferred to stay at homestaysrather than hotelsTHE PROPORTION OF SPENDING ON HOMESTAYS VS ALL ACCOMMODATION COSTS51%46%42%1990S1980S1970SSource: Nielsen16

TRENDS IN MOBILE PAYMENTBY CHINESE TOURISTS17

1. CHINESE TOURISTS CONTINUE TO USE MORE MOBILEPAYMENT OVERSEASThe proportion of Chinese tourists using mobile payment when traveling abroad in 2019 remainedstable compared with 2018. Meanwhile, mobile payment engagement level (the proportion of mobilepayment transactions by Chinese tourists traveling overseas) and the depth of usage (total spending viamobile payment by Chinese tourists traveling overseas) continued to increase, indicating a more in-depthdevelopment in Chinese mobile payment solutions around the world.INCREASE IN PROPORTION OF MOBILE PAYMENT TRANSACTIONS OF CHINESE TOURISTSIn 2019, 3.4 out of every 10 payments made by each Chinese tourist during overseas travel weremobile payments, with a slight rise against 2018 (3.2 payments), further narrowing the gap betweenmobile payment and bankcard payment. The engagement of mobile payment of post-90s touristshas increased by 11%.It is also found that the proportion of cash payment made by Chinese tourists traveling overseas in2019 increased, which was mainly due to the fact that more Chinese tourists were changing theirdestinations from the popular East Asian countries to more distant countries or countries wherecash is more frequently used.THE PROPORTION OF PAYMENT TRANSACTIONS BY CHINESETOURISTS TRAVELING OVERSEASMobile paymentBankcard paymentCash payment3.23.83.03.43.13.620182019Source: Nielsen18

TOTAL SPENDING VIA MOBILE PAYMENT BY CHINESE TOURISTS INCREASEDThe total amount of consumption via mobile payment in the destination during tourists’ most recentoverseas trip increased significantly as well. The per capita total amount of mobile payment made byoutbound Chinese tourists increased by 18% compared to 2018. Specifically, the total spending via mobilephone of tourists born in the 1990s increased by more than 35% over 2018.Through studying consumption scenarios of Chinese tourists when making mobile payment, it isfound that Chinese tourists used mobile payment more often when shopping at duty-free stores,large discount retailers, and fashion and beauty stores as well. The high acceptance of Chinese mobilepayment solutions in these places had also driven the usage of mobile payment by Chinese tourists.SHOPPING USE CASES OF MOBILE PAYMENT BY OUTBOUND CHINESE TOURISTS29%Duty-free stores13%Fashion and beauty storeLarge discount retailers8%32%16%14%20182019Source: Nielsen19

2. REGIONAL DIFFERENCES IN THE ADOPTION OFCHINESE MOBILE PAYMENTTOTAL SPENDING VIA MOBILE PAYMENT OF CHINESE TOURISTS INCREASED SIGNIFICANTLY INCOUNTRIES WHERE CHINESE MOBILE PAYMENT ADOPTION ARE RELATIVELY MATUREBy analyzing spending via mobile payment by Chinese tourists in 2019 and 2018, different levels ofdevelopment are found for Chinese mobile development in outbound tourism markets.For example, in Singapore, Japan and South Korea, the usage rate of mobile payment among Chinesetourists is high, reaching nearly 70% in 2018 and 2019. The in-depth development of Chinese mobilepayment in these regions are characterized by the significant increase in the total spending via mobilepayment made by Chinese tourists in 2019. For example, the total amount of mobile payment byChinese tourists in Japan and South Korea increased by about 23% compared with 2018. In Singaporeand Thailand, this figure witnessed a 14% rise.In distant countries that are gradually gaining popularity among Chinese tourists, such as Australia andNew Zealand, mobile payment by Chinese tourists also shows an in-depth development. Thepenetration of mobile payment in Australia and New Zealand was already relatively high in 2018(68%). In terms of mobile payment used by Chinese tourists in Australia and New Zealand in 2019,the engagement of Chinese tourists reaches 34%, while the total expenditure increased by 15%compared with 2018.NORTH AMERICAEUROPEJAPANSOUTH KOREAEAST ASIAAUSTRALIANEW ZEALANDRegions where Chinese mobile payment solutions are activeRegions where Chinese mobile payment solutions are moderately activeRegions where Chinese mobile payment solutions are rapidly developingSource: Nielsen20

MOBILE PAYMENT BECAME MUCH MORE POPULAR WITH CHINESE TOURISTS IN COUNTRIESWHERE CHINESE MOBILE PAYMENT IS DEVELOPING RAPIDLYIn overseas regions where Chinese tourists did not use mobile payment quite often previously, theadoption of Chinese mobile payment has been growing rapidly. For example, in the U.K. and France,about 60% of Chinese tourists used mobile payment in 2018, but the proportion rose significantly to 65%in 2019. A similar trend occured in North America. The usage rate of mobile payment among Chinesetourists increased to 63% in 2019, and the proportion of mobile payment transactions also increasedfrom 2.8 out of every 10 payments in 2018 to 3.1 payments in 2019.60% 65%The U.K. / France61% 63%The U.S. / CanadaThe usage rate of mobile paymentby Chinese tourists traveling todifferent destinations2.8 3.22.8 3.1The U.K. / FranceThe U.S. / CanadaThe proportion of mobile paymenttransactions by Chinese touriststraveling to different destinations20182019Source: NielsenThe growing popularity of mobile payment in Europe, North America and other regions was due to, onthe one hand, the changes in the payment habits of Chinese tourists. It was found that Chinese touristscarried less foreign currency before traveling to Europe, decreasing by 16% in 2019. On the other hand,the wider acceptance of mobile payment by local merchants contributed to Chinese tourists’ increasinguse of mobile payment. Roughly 64% of Chinese tourists who visited Europe in 2019 mentioned thatmore local merchants accepted Chinese mobile payment, showing an increase from only 54% in 2018.DO YOU FEEL THAT MORE MERCHANTS IN EUROPE ACCEPT MOBILE PAYMENT?Europe54%54%64%64%2018201820192019S

CHAPTER 1 TOP TRAVEL DESTINATIONS FOR CHINESE TOURISTS 1. Top 10 overseas destinations in 2019 2. Top 10 countries where Chinese tourists love to use mobile payment 3. Top 10 future destinations for 2020 CHAPTER 2 TRENDS IN CHINESE TRAVEL AND CONSUMPTION OVERSEAS 1. Lower-tier1 cities provide